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The Pamphlet Collection of Sir Robert Stout: Volume 68

[introduction]

decorative feature

In departing from the usual rule, and addressing the public by pamphlet instead of by means of a public meeting, I may say I do so for several reasons. The particular subject which I wish to bring before you is, to my mind, of too great importance to be brought forward first at a public meeting, where the words of the speaker may be either imperfectly heard or imperfectly understood, and where it is inevitable that the mass of the people would be dependent upon the report of the meeting in the columns of the newspaper. Being politically a stranger amongst you, I could not expect a verbatim report, and lit is certain that in reducing the matter to publishing dimensions, it would hardly be possible to avoid at least some misconceptions and errors, which would probably create a mistaken and perhaps unfavourable view of my meaning.

It appears to me that the time has arrived liken we may, by the adoption of a bold and just policy, ensure an early and enormous extension of the settlement of the colony, and in laying my views before you as to the lines upon which I believe this policy may be conducted, I do so with the view of calling attention to the advantages to be secured to the colony by the repurchase and settlement of the large freehold blocks.

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New Zealand possesses every capability for supporting a population of several millions, and if a policy of progress, a policy of settlement is adopted, we shall, within a few years, find the colony with a population of three or four times its present number. In addition to the natural capabilities of the colony, we have a magnificent system of public works; a system of roads, bridges, and telegraphs, sufficient for the service of a far larger population than the colony at present contains. These public works have been constructed at great public expense, with the result that New Zealand is one of the most heavily indebted countries of the world in proportion to its population, and as a natural result, it is one of the most heavily taxed countries; indeed, so great is the pressure of taxation, that unless some means can be found to reduce it, we shall soon find the taxpayer repeating the sentiment of the poet (in the present instead of the past tense), and crying "the burden laid upon me" is "greater than I can bear;" but this pressure may be lessened, this taxation may be reduced by an increase of the settled population of the colony, and by no other means can it be reduced to any appreciable extent; but I believe that by the exercise of our just, legitimate, and necessary rights, we may, without injustice to any, and with speedy relief to the taxpayer of the colony, adopt a policy which, within a few years of its adoption, will double the settled population of the colony, halve its taxation, and create such a page 7 market for our local manufactures that the necessity for protective tariffs shall no longer exist.

The policy which I advocate is the policy of settlement by means of the re-purchase of the large freehold blocks of land, their sub-division into suitable areas, and their being let to tenants upon a leasehold tenure—atenure under which the tenant shall have absolute ownership of all his improvements, under which he shall have a perpetual right to the renewal of his lease; subject only to the payment of a fair ground rental, (or land tax, if you prefer the term), to the State as representing the community. This I maintain is the only just system of land tenure.

You are frequently told at public meetings feat the freehold tenure of land is the best, that the freehold tenure of land is the only tenure which will be acceptable to the people of this colony; but when you are told this, I will ask you to consider the position and interests of those persons who are so anxious to impress you with the advantages of the present system, I think you will find that they usually belong to one of three classes; large landholders, lawyers, or persons interested in the large mortgage and financial companies which flourish so rankly in the colony.

We will consider in a few words the interests of these persons, and I think we shall then understand why they are such strenuous advocates of the freehold system.

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The large landholder advocates the system because he plainly sees that the time must come when the increase of population, and the progress of the colony, will enable him (or his descendants) to either let the land, thereby placing him or them on a footing with the large territorial proprietors in the older countries of the world, or else to sell the land for a good price, and frequently on terms which leave the seller still virtually the possessor. The terms upon which land is generally sold are something like the following :—A deposit of one-fourth or one-sixth in cash, the remainder upon mortgage for a term of years, with periodical payments. Under the persuasive eloquence of an able auctioneer, and induced by the apparent easiness of the terms, a high price is obtained for the land; with the result that the purchaser is unable to complete his payments, and the land with all its improvements reverts to the original holder, who is then able once more to sell it with probably the same result. We cannot be surprised that the large landholder believes in the freehold system.

Another class whose members, with one notable exception, are earnest upholders of the system,' are the lawyers, but when we remember that by far the largest, portion of their professional income is derived from conveyancing and mortgaging, I think we must allow that their advocacy is not to be wondered at.

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The officials and shareholders of the large financial companies are also found very anxious to maintain the freehold system, but as it is by means of it they are enabled to draw their salaries or receive dividends of from ten to twenty-five per cent. we cannot be surprised that they are averse to any change. For these classes undoubtedly the freehold tenure is the best.

If the object of our social system is to create, maintain, and perpetuate class distinctions. If the object of our social system is the existence a society in which there shall be a few rich, and a large majority poor or working for a bare existence, then without doubt freehold tenure is the best, but if the object of our social system is the existence of a large, contented, and independent population, then the freehold system has proved a decided failure, and is the principal cause of a state of society which in the older countries of the world threatens to eventuate in a fearful revolution.

The reason there are so many supporters of freehold tenure among the mass of the people is because they look upon it as the only secure tenure, the only tenure under which a person can depend upon enjoying the full results of his labour. If we can substitute a system under which a person has a perpetual right to the renewal of the lease, under which the tenant may safely build, cultivate, and improve the land page 10 with absolute personal ownership of the whole results of the labour expended, a tenure, in fact, which while securing to the tenant the whole of the improvements, will secure to the people the increase in the value of the land, so far as it is caused by the progress of the colony, the increase of population, and the expenditure upon public works, we shall have instituted a tenure which will be beneficial to the tenant, and also to the community. This tenure would be a just tenure. It would be just to the tenant and just to the people.

Perhaps you will reply—"But under this tenure we shall have to pay rent." True, you will have to pay rent, and if you do not or cannot pay rent you will lose your hold upon the land; but I think a few minutes consideration will show you that under the freehold tenure you also pay rent, that you cannot avoid paying rent, and moreover that under the freehold system, if you cannot pay rent, you lose not only your hold upon the land, but also run a very great risk of losing a large portion of the capital value of the land, and of the money you have expended upon improvements.

Now as to this question of rent. If you hold a piece of land under the freehold system, you must occupy one of two positions, either you hold the land free of encumbrance, that is, the land represents capital, or you hold it subject to a mortgage.

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In the first case, the rent of the land is the interest of the capital value of the land. For instance, we will suppose that you hold a piece of land worth £500, and that money on investment will return seven per cent interest. Your £500 if invested, would give you an interest of £35 a year, but you forego this interest in exchange for the use of the land, which, if there is any logic in figures, is equivalent to paying a rental of £35 a year. To make the matter plainer, we will suppose you invested your £500, receiving £35 a year interest, and then pay that amount for the use of the land. I presume you would then allow that you were paying rent. In this latter case, you would frequently be in a better position than than if you held the freehold; for, supposing your occupancy of the land to be unprofitable, or, should you from any cause wish to leave it, if you were a tenant you could do so on giving a reasonable notice, but if you were a freeholder, you would have to find a purchaser for the property, and probably, if you were compelled to force your property on the market you would find the nominal value of £500 considerably reduced, and you would lose the difference.

In the second place, where you hold the property subject to a mortgage, the interest of the mortgage is the rent you pay for the land, but it is not the whole of the rent. The mortgagee always endeavours and generally succeeds in retaining a margin between the value of the page 12 property and the amount advanced upon mortgage. The interest of this amount has to be added to the interest paid on the mortgage, the whole amount being the rent paid for the land.

To the person holding under this tenure, the term freeholder is a sarcasm. The only freedom he has is the freedom to work for the mortgagee, the margin between the value of the property and the amount advanced upon mortgage, together with the money which, under the fond delusion that he is a freeholder, he has expended upon improvements, chain him to the land.

The principal of the mortgage is as a millstone round his neck, a weight from which he is unable to free himself, and which frequently, after a few years struggling, drags him to the bottom of a sea of debt. The mortgagee either for closes, in which case, the land submitted to a forced sale barely realises sufficient to pay the mortgage and expenses, leaving the so-called freeholder ruined and helpless, or else the mortgagee suiters him to remain in possession a freeholder in name, but a tenant in reality, a tenant without the option of relinquishing his tenancy, except under the penalty of absolute ruin.

Before I proceed to detail the plan I propose, I wish to devote a short time to the consideration of an objection which has been and doubtless will again be raised to the proposal for the re-purchase page 13 of the large freehold blocks by the State. It has been alleged that the proposal is unjust, that the State having parted with the land is not justified in resuming possession. If this contention can be proved, if the proposition is unjust, then we must look in some other direction for relief from those social dangers which threaten the community, for I am convinced that the people will never support an injustice, nor would anyone who has the welfare and the honour of the country at heart wish them to do so.

But I think those objecting to the proposal on this ground do so because they do not realise the difference, the essential difference, between land and personal property, they have not given sufficient attention to the writings of political economists, the utterances of statesmen, or the tendency of modern legislation upon landed tenure.

The difference between land and personal property is a difference not of degree but of principle. The land of a country is for the use and support of the inhabitants of the country, not as a matter of absolute ownership and property, but for their use and support, a life interest in fact, to be held in trust and handed down without restriction or reservation for the use and support of succeeding generations.

What moral right have the people of the present day, much less the first comers to a new colony, to allot and apportion the land, as absolute page 14 personal property, which must be the only means of support of all succeeding inhabitants of the country. There is no moral right, strictly speaking, there is not even a legal right, but were the legal right undoubted it could be legally altered, and where the legal right was a moral and a social wrong it would be the duty of our legislators to amend the law. But it is not my intention to take up time with any abstract arguments upon the question. I think it is better for me to quote a few extracts from the writings and speeches of those who have considered the subject, and to whose opinions, being those of men of acknowledged authority as political economists, statesmen or politicians, you will naturally pay more attention than to those of an obscure individual like myself.